But there are also taxpayers who willfully fail to report income, file required returns, or pay taxes due. For taxpayers whose willful noncompliance could expose them to criminal prosecution, IRS Criminal Investigation (IRS-CI) offers the Voluntary Disclosure Practice (VDP). The program provides eligible taxpayers with an opportunity to disclose past noncompliance, cooperate with the IRS, and resolve their tax obligations. A timely, truthful, and complete voluntary disclosure may result in IRS-CI not recommending criminal prosecution.
Does it work? According to the Taxpayer Advocate Service (TAS), the program is not working as effectively as intended.
The IRS Voluntary Disclosure Practice (VDP) provides taxpayers with potential criminal tax exposure an opportunity to voluntarily disclose willful noncompliance, resolve their tax obligations, and potentially avoid criminal prosecution. VDP is open to those who have not complied as required with tax regulations or have committed a tax crime. You cannot participate if the source of your income is illegal under federal law or if you are already under criminal investigation.
In the early 2000s, the VDP evolved as the IRS increased its enforcement of offshore tax noncompliance. Later changes to the program, particularly revisions made in 2018, increased potential penalties for taxpayers seeking voluntary disclosure. The Taxpayer Advocate Service has raised concerns that these changes made the program less attractive to taxpayers and contributed to a significant decline in participation. TAS has argued that improving the program could encourage more taxpayers with willful noncompliance to come forward voluntarily.
In December 2025, the IRS proposed revisions to the Criminal VDP. The public comment period ended in March 2026, but the IRS has not yet announced final changes to the program. Under the proposed framework, changes would include:
Amended returns would result in a 20 percent accuracy-related penalty for each year in the disclosure period.
Failure to file penalties would accrue on delinquent returns, but failure to pay penalties would not.
Amended or delinquent Report of Foreign Bank and Financial Accounts (FBARs) would be subject to penalties for each year in the disclosure period, with annual inflation adjustments.
Amended or delinquent international information returns could be subject to penalties of up to $10,000 per return, per year.
A lot will depend on the still-to-come final terms of the new VDP. The TAS has also raised concerns that the proposed changes do not provide appeal rights for taxpayers who disagree with an IRS determination while participating in the VDP.
For additional background on criminal tax fraud and potential criminal tax exposure, see our resource, Will I Be Charged with Criminal Tax Fraud?.
If you are concerned that past tax noncompliance could expose you to criminal prosecution, gaining a clear understanding of your situation and available options is important. Call us at 440-250-9709 or reach out to set up a consultation. We serve domestic and international clients from offices in Cleveland and Chicago.